B-201215, SEP 30, 1981

B-201215, SEP 30, 1981

DIGEST: NATIONAL SCIENCE FOUNDATION (NSF) ACTED PROPERLY IN ADDING TWO CONDITIONS TO SOLICITATION FOR AWARD OF CONTRACT TO OPERATE COASTAL ZONE RESEARCH VESSEL. SOLICITATION MAY BE MODIFIED IN RESPONSE TO CHANGED NEEDS AS LONG AS ALL OFFERORS ARE NOTIFIED OF CHANGE AND GIVEN OPPORTUNITY TO RESPOND. REQUIREMENTS THAT OFFERS NOT INCREASE OVERALL FLEET COSTS OR EXCESS SHIP TIME WERE NOT IMPROPER CONDITIONS OF AWARD, SINCE DETERMINING MINIMUM NEEDS IS WITHIN JURISDICTION OF PROCURING AGENCY. AWARD ITSELF IS NOT OBJECTIONABLE SINCE NSF SELECTED OFFEROR BEST QUALIFIED TO MEET ITS REQUIREMENTS AND DID NOT ACT IMPROPERLY IN GIVING DETERMINATIVE WEIGHT TO COST AND SHIP USE CRITERIA.

GROUP DIRECTOR, PAD - MARGARET H. DYESS:

NATIONAL SCIENCE FOUNDATION AWARD OF CONTRACT TO OPERATE COASTAL ZONE RESEARCH VESSEL (FILE B-201215; CODE 920868)

YOU HAVE ASKED US TO EXAMINE SEVERAL ASPECTS OF THE AWARD BY THE NATIONAL SCIENCE FOUNDATION (NSF) TO DUKE UNIVERSITY AND THE UNIVERSITY OF NORTH CAROLINA (DUKE/UNC) JOINTLY OF A CONTRACT TO OPERATE A COASTAL ZONE RESEARCH VESSEL. YOUR QUESTIONS AND OUR RESPONSES, MAY BE SUMMARIZED AS FOLLOWS:

QUESTION 1: DID NSF ACT IMPROPERLY IN REQUIRING, AS A CONDITION OF AWARD OF THE CONTRACT TO OPERATE THE SECOND COASTAL RESEARCH VESSEL, THAT THE PROPOSALS NOT INCREASE OVERALL FLEET COSTS OR SURPLUS SHIP TIME?

ANSWER: NO. BY ADDING THE FLEET COSTS AND SHIP USE CRITERIA, NSF IN EFFECT AMENDED ITS ORIGINAL SOLICITATION. A SOLICITATION MAY BE MODIFIED IN RESPONSE TO CHANGED NEEDS, AS LONG AS THE PROCURING AGENCY GIVES NOTICE OF THE CHANGE AND ALLOWS AN OPPORTUNITY TO RESPOND. ADP NETWORK SERVICES, B-193817, MARCH 7, 1979. THESE CONDITIONS WERE MET IN THIS CASE.

QUESTION 2: WERE THE ADDED REQUIREMENTS REASONABLE CONDITIONS FOR AWARD OF THE CONTRACT?

ANSWER: DETERMINATION OF THE GOVERNMENT'S MINIMUM NEEDS IS WITHIN THE JURISDICTION OF THE PROCURING AGENCY AND WILL NOT BE QUESTIONED UNLESS THE AGENCY'S DECISION IS CLEARLY UNREASONABLE. THE RECORD DOES NOT INDICATE THAT NSF'S ACTION IN THIS CASE WAS ARBITRARY OR UNREASONABLE.

QUESTION 3: WAS THE AWARD TO DUKE/UNC ARBITRARY?

ANSWER: NO. FIRST, BY AWARDING THE CONTRACT TO DUKE/UNC, NSF SEEMINGLY GAVE DETERMINATIVE WEIGHT TO THE COST AND SHIP USE CRITERIA. THIS IS NOT IN ITSELF OBJECTIONABLE. SECOND, IN VIEW OF THE REFUSAL OF WASHINGTON AND WOODS HOLE TO COMPLY WITH NSF'S CONDITIONS REGARDING SHIP USE, IT SEEMS THAT NSF ACTED ON THE ASSUMPTION THAT AWARD TO DUKE/UNC AT LEAST WOULD NOT INCREASE SURPLUS SHIP TIME, SINCE DUKE/UNC HAD AGREED TO RETIRE A SHIP EQUIVALENT IN SIZE TO THE NEW SHIP. IN THAT LIGHT, DUKE/UNC CLEARLY WAS PREFERABLE.

A DETAILED DISCUSSION FOLLOWS.

ANALYSIS

BACKGROUND

THE NSF PARTICIPATES IN THE OPERATION AND MAINTENANCE OF A FLEET OF SHIPS USED BY ACADEMIC INSTITUTIONS TO CARRY OUT RESEARCH FUNDED BY NSF AND OTHER FEDERAL AND STATE AGENCIES. SOME OF THE VESSELS ARE OWNED BY NSF, SOME BY THE NAVY, AND SOME BY THE INSTITUTIONS, BUT ACCESS TO THE FLEET IS CONTROLLED BY AN INDEPENDENT ORGANIZATION OF SHIP OPERATOR INSTITUTIONS, THE UNIVERSITY-NATIONAL OCEANOGRAPHIC LABORATORY SYSTEM.

IN RESPONSE TO A NEED TO ADD COASTAL RESEARCH SHIPS TO THE FLEET, NSF SOLICITED PROPOSALS IN EARLY 1979 FOR THE CONSTRUCTION AND OPERATION OF ONE OR MORE COASTAL ZONE RESEARCH VESSELS. THE SOLICITATION LISTED FOUR CRITERIA WHICH WOULD BE USED TO EVALUATE THE PROPOSALS, ALL RELATED TO THE SCIENTIFIC AND MANAGERIAL CAPABILITIES OF THE OFFERORS. THE EVALUATION WAS TO BE CONDUCTED IN TWO STEPS: AN ADVISORY GROUP OF EXPERTS OUTSIDE NSF WAS TO MAKE AN INITIAL RATING OF THE PROPOSALS AND WOULD SUBMIT ITS RECOMMENDATION TO AN NSF EVALUATION PANEL, WHICH WOULD MAKE THE FINAL RECOMMENDATION OF AWARD.

NSF DECLINED FIVE OF THE NINE PROPOSALS RECEIVED. OF THE FOUR REMAINING OFFERORS - UNIVERSITY OF MIAMI, UNIVERSITY OF WASHINGTON, WOODS HOLE OCEANOGRAPHIC INSTITUTE, AND DUKE UNIVERSITY/UNIVERSITY OF NORTH CAROLINA (DUKE/UNC) - NSF AWARDED THE CONTRACT FOR CONSTRUCTION AND OPERATION OF THE FIRST VESSEL TO THE UNIVERSITY OF MIAMI. MIAMI HAD RECEIVED THE HIGHEST RATING FROM THE NSF EVALUATION PANEL, BASED ON THE FOUR EVALUATION CRITERIA, AND ALSO WAS WILLING TO DECREASE OVERALL FLEET COSTS BY RETIRING ONE OF ITS LARGE VESSELS.

THE NSF EVALUATION PANEL ALSO RECOMMENDED THAT NEGOTIATIONS FOR A SECOND COASTAL VESSEL BE CONDUCTED WITH THE UNIVERSITY OF WASHINGTON AND WOODS HOLE, IN THAT ORDER. FN1 ALTHOUGH THE ADVISORY GROUP HAD RECOMMENDED THAT DUKE/UNC'S PROPOSAL BE DECLINED, THE NSF PANEL DECIDED TO SET ASIDE THAT PROPOSAL AND KEEP IT AVAILABLE SHOULD NEGOTIATIONS WITH THE HIGHER-RANKING OFFERORS PROVE UNSATISFACTORY.

WHILE THE PROPOSALS WERE CONSIDERED ACCEPTABLE BY THE NSF PANEL ON THE BASIS OF THE EVALUATION CRITERIA, THE PANEL THOUGHT THAT FURTHER DISCUSSION WAS NECESSARY TO REACH AGREEMENT ON WAYS THAT THE SUCCESSFUL OFFEROR COULD REDUCE OVERALL FLEET COSTS. APPARENTLY, NSF WAS FACED WITH FLEET FUNDING PROBLEMS AND SURPLUS SHIP TIME, PARTICULARLY ON THE LARGER VESSELS IN THE FLEET. NSF PLANNED TO ALLEVIATE THOSE PROBLEMS BY REQUIRING THE OFFERORS TO PROPOSE MEASURES WHICH WOULD NOT INCREASE, AND PREFERABLY WOULD DECREASE, EXCESS SHIP TIME AND OVERALL OPERATING COSTS FOR THE ENTIRE FLEET.

THE INSTITUTIONS SUBSEQUENTLY WERE INFORMED THAT, AS A PREREQUISITE OF AWARD, THEIR PROPOSALS MUST NOT INCREASE FLEET COSTS OR SURPLUS SHIP TIME. A LETTER AND INFORMATION SHEET WERE SENT TO WASHINGTON, WOODS HOLE, AND DUKE/UNC IN DECEMBER 1979, EMPHASIZING THE IMPORTANCE OF THE ABILITY TO REDUCE FLEET COSTS AND SURPLUS SHIP TIME. NEGOTIATIONS WERE HELD IN JANUARY 1980, FOLLOWED BY A LETTER FROM NSF IN FEBRUARY 1980 TO THE SAME THREE PARTIES STATING THAT AWARD WOULD NOT BE MADE TO ANY INSTITUTION WHOSE OFFER WOULD INCREASE FLEET COSTS OR SURPLUS SHIP TIME. THE LETTER CONTEMPLATED THAT THE INSTITUTIONS WOULD BE SUBMITTING FINAL OFFERS, AND SPECIFIED WAYS IN WHICH EACH OFFEROR COULD SATISFY THE COST AND TIME REQUIREMENTS. FOR WASHINGTON, NSF INDICATED THAT RETIREMENT OF A SHIP LARGER THAN THE NEW COASTAL VESSEL WAS A CONDITION OF AWARD. WITH REGARD TO DUKE/UNC, NSF RECOMMENDED SALE OF A SHIP EQUIVALENT IN SIZE TO THE NEW VESSEL, SINCE DUKE/UNC APPARENTLY DID NOT OPERATE A LARGER SHIP. FOR WOODS HOLE, NSF PROPOSED SEVERAL ALTERNATIVES FOR RETIREMENT OR LAY-UP OF VARIOUS SHIPS.

BOTH WASHINGTON AND WOODS HOLE REPLIED IN MARCH 1980 THAT THEY WOULD NOT CONSENT TO NSF'S CONDITIONS; DUKE/UNC DID AGREE TO RETIRE A SHIP AS SUGGESTED BY NSF. DUKE/UNC ALSO PROPOSED OTHER MEASURES WHICH WOULD REDUCE OPERATING COSTS, INCLUDING USING EQUIPMENT FROM THE SHIP BEING SOLD TO OUTFIT THE NEW VESSEL AND SECURING ADDITIONAL STATE FUNDS FOR OPERATION OF THE VESSEL.

IN MAY 1980, NSF AWARDED THE CONTRACT FOR OPERATION OF THE SECOND VESSEL TO DUKE/UNC.

QUESTION 1: DID NSF ACT IMPROPERLY IN REQUIRING, AS A CONDITION OF AWARD OF THE CONTRACT TO OPERATE THE SECOND COASTAL RESEARCH VESSEL, THAT THE PROPOSALS NOT INCREASE OVERALL FLEET COSTS OR EXCESS SHIP TIME?

BY ADDING THE FLEET COSTS AND SHIP USE CRITERIA, NSF IN EFFECT AMENDED ITS ORIGINAL SOLICITATION. A SOLICITATION MAY BE MODIFIED IN RESPONSE TO CHANGED NEEDS, AS LONG AS THE OFFERORS ARE NOTIFIED OF THE CHANGE AND ARE GIVEN AN OPPORTUNITY TO RESPOND. ADP NETWORK SERVICES, B-193817, MARCH 7, 1979. FN2

NSF FIRST NOTIFIED THE THREE OFFERORS FN3 BY LETTER IN DECEMBER 1979 OF ITS ADDED REQUIREMENT TO HOLD DOWN COSTS AND SURPLUS SHIP TIME. THE LETTERS INDICATED THAT GREAT WEIGHT WOULD BE GIVEN TO THOSE FACTORS IN THE EVENTUAL AWARD. THOSE ISSUES WERE THE SUBJECT OF THE NEGOTIATIONS IN JANUARY 1980 AND NSF'S REQUIREMENTS WERE REITERATED IN SPECIFIC TERMS IN SUBSEQUENT CORRESPONDENCE. THE OFFERORS THEN WERE GIVEN A FINAL OPPORTUNITY TO RESPOND BEFORE AWARD WAS MADE.

IT IS OUR VIEW THAT NSF PROPERLY MODIFIED THE SOLICITATION, SINCE THE OFFERORS WERE NOTIFIED OF THE CHANGE AND WERE GIVEN AN EQUAL OPPORTUNITY TO RESPOND TO THE NEW REQUIREMENTS.

QUESTION 2: WERE THE ADDED REQUIREMENTS REASONABLE CONDITIONS FOR AWARD OF THE CONTRACT?

DETERMINATION OF THE GOVERNMENT'S MINIMUM NEEDS IS WITHIN THE JURISDICTION OF THE PROCURING AGENCY AND WILL NOT BE QUESTIONED UNLESS THE AGENCY'S DECISION IS CLEARLY UNREASONABLE. E.G., 54 COMP.GEN. 612, 615 (1975). HERE, NSF DECIDED THAT IT COULD ACHIEVE NEEDED ECONOMIES FOR THE ENTIRE FLEET BY MAKING THE IMPACT OF THE CONTRACT AWARD ON FLEET USE AND COSTS A FACTOR IN ITS EVALUATION OF PROPOSALS. APPARENTLY THE DISAPPOINTED OFFERORS DISAGREE WITH NSF'S DECISION AND HAVE ARGUED THAT FLEET ECONOMIES SHOULD BE ARRANGED INDEPENDENT OF THE PROCUREMENT. FN4

THE RECORD DOES NOT INDICATE THAT NSF'S ACTION WAS ARBITRARY OR UNREASONABLE. NSF IMPOSED THE CONDITIONS WITH A VIEW TOWARD BETTER MANAGEMENT OF THE TOTAL FLEET AND BETTER USE OF ITS CONTRIBUTIONS TO THE OPERATION OF THE FLEET; THAT THERE MAY HAVE BEEN OTHER WAYS OF ACHIEVING THOSE GOALS DOES NOT AFFECT THE REASONABLENESS OF NSF'S DECISION FROM A LEGAL STANDPOINT. SEE, E.G., SWINGLINE INC., B-200019, MAY 4, 1981. NSF WANTED TO BE SURE THAT THIS AWARD WOULD NOT HAVE AN ADVERSE IMPACT ON THE OTHER VESSELS WHOSE OPERATION NSF SUPPORTS, AND IMPOSING THE COST AND USE CONDITIONS WAS A REASONABLE MEANS OF REACHING THAT END.

QUESTION 3: WAS THE AWARD TO DUKE/UNC ARBITRARY?

NSF IMPOSED TWO ADDITIONAL REQUIREMENTS ON THE OFFERORS FOR THE SECOND CONTRACT: THEIR PROPOSALS COULD NOT INCREASE EITHER TOTAL FLEET OPERATING COSTS OR SURPLUS SHIP TIME. TWO QUESTIONS ARISE CONCERNING THE ROLE PLAYED BY THOSE REQUIREMENTS IN THE AWARD PROCESS: FIRST, WHETHER NSF GAVE APPROPRIATE WEIGHT TO THE COST AND SHIP USE FACTORS; AND, SECOND, WHETHER THE OFFERORS' COMPLIANCE WITH THE CONDITIONS WAS REASONABLY EVALUATED.

FIRST, BY AWARDING THE CONTRACT TO DUKE/UNC, IT SEEMS THAT NSF GAVE DETERMINATIVE WEIGHT TO THE COST AND SHIP USE CRITERIA, SINCE DUKE/UNC RECEIVED THE LOWEST SCIENTIFIC RATING OF THE THREE OFFERORS. GENERALLY, THE WEIGHT ASSIGNED TO VARIOUS EVALUATION FACTORS FALLS WITHIN THE SCOPE OF THE AGENCY'S AUTHORITY TO DETERMINE ITS OWN NEEDS, AS LONG AS THE OFFERORS ARE INFORMED OF THE WEIGHT ASSIGNED. SEE, E.G., 49 COMP.GEN. 229, 230 (1969). SIMILARLY, EVALUATION OF PROPOSALS IS CONSIDERED THE AGENCY'S EXCLUSIVE RESPONSIBILITY, SINCE IT BEARS THE RISK OF UNSATISFACTORY PERFORMANCE. BUFFALO ORGANIZATION FOR SOCIAL AND TECHNOLOGICAL INNOVATION, B-196279, FEBRUARY 7, 1980. ACCORDINGLY, THE FACT THAT THE ADDED REQUIREMENTS WERE DETERMINATIVE OF THE AWARD IS NOT ITSELF OBJECTIONABLE.

SECOND, IN VIEW OF THE REFUSAL OF WASHINGTON AND WOODS HOLE TO COMPLY WITH NSF'S CONDITIONS REGARDING SHIP USE, NSF COULD NOT ACHIEVE ITS PREFERRED GOAL OF REDUCING SURPLUS SHIP TIME BY CONTRACTING WITH EITHER OF THEM. INSTEAD, BY SELECTING DUKE/UNC, IT SEEMS THAT NSF ACTED ON THE ASSUMPTION THAT AWARD TO DUKE/UNC AT LEAST WOULD NOT INCREASE SURPLUS SHIP TIME, SINCE DUKE/UNC HAD AGREED TO RETIRE A SHIP EQUIVALENT IN SIZE TO THE NEW SHIP. IN THAT LIGHT, DUKE/UNC CLEARLY WAS PREFERABLE TO WASHINGTON AND WOODS HOLE, SINCE ONLY DUKE/UNC'S PROPOSAL WOULD NOT INCREASE SURPLUS SHIP TIME, AND THUS WOULD SATISFY ONE OF NSF'S REQUIREMENTS.

WE UNDERSTAND THAT YOUR WORK MAY DISCLOSE THAT AWARD TO DUKE/UNC ACTUALLY WILL EXACERBATE UNDER-USE OF SHIPS ON THE EAST COAST. IN COMPARISON, ALTHOUGH AN AWARD TO WASHINGTON WOULD HAVE AGGRAVATED THE UNDER-USE PROBLEM ON THE WEST COAST, IT MAY HAVE HAD LESS OF AN ADVERSE EFFECT ON WEST COAST FLEET USE THAN THE AWARD TO DUKE/UNC COULD HAVE ON THE EAST COAST FLEET. IF THOSE ARE THE ULTIMATE FINDINGS, IT WOULD APPEAR THAT NONE OF THE THREE OFFERORS SATISFIED NSF'S REQUIREMENT NOT TO INCREASE SURPLUS SHIP TIME.

NEVERTHELESS, THE AWARD IS NOT ARBITRARY MERELY BECAUSE IT DOES NOT ACHIEVE THE DESIRED RESULT; THE AWARD WOULD BE SUBJECT TO CHALLENGE ONLY IF NSF'S EVALUATION OF DUKE/UNC'S OFFER WAS ARBITRARY OR UNREASONABLE, OR IF NSF CONCEDED THAT NONE OF THE OFFERORS SATISFIED ITS FIRST CONDITION. WITH RESPECT TO THE FIRST GROUND, IMPLICIT IN THE AWARD TO DUKE/UNC IS A DETERMINATION BY NSF THAT DUKE/UNC SATISFIED BOTH CONDITIONS. THAT DETERMINATION IS SIMILAR TO A TECHNICAL EVALUATION BY THE PROCURING AGENCY, WHICH OUR OFFICE WILL QUESTION ONLY UPON A CLEAR SHOWING THAT IT WAS ARBITRARY OR UNREASONABLE. E.G., PACIFICON PRODUCTIONS, INC., B-196371, JULY 20, 1980.

ON THE OTHER HAND, IF NSF CONCEDED THAT NOT ONLY DUKE/UNC BUT NONE OF THE THREE OFFERORS COULD SATISFY THE SURPLUS SHIP TIME CONDITION AND DECIDED TO PROCEED WITH THE AWARD ANYWAY FN5, THE CONDITION WAS, IN EFFECT, ELIMINATED. UNDER THOSE CIRCUMSTANCES, ALL OFFERORS SHOULD HAVE BEEN INFORMED OF THE CHANGE AND ALLOWED AN OPPORTUNITY TO SUBMIT PROPOSALS ON THE BASIS OF THE AMENDED REQUIREMENTS. SEE 48 COMP.GEN. 663 (1969); HOMEMAKER HEALTH AID SERVICE, B-188914, SEPTEMBER 27, 1977.

WITH RESPECT TO NSF'S SECOND REQUIREMENT, REDUCING FLEET OPERATING COSTS, THE AGENCY CONCLUDED THAT THE WASHINGTON AND WOODS HOLE PROPOSALS WOULD INCREASE FLEET COSTS, WHILE THE DUKE/UNC PROPOSAL WOULD REDUCE THEM. ALTHOUGH IT APPEARS THAT NSF INCORRECTLY ASSESSED THE IMPACT OF WASHINGTON'S PROPOSAL ON FLEET COSTS FN6, DUKE/UNC NEVERTHELESS PROPOSED THE GREATEST SAVINGS. THUS, ASSUMING THAT ONLY DUKE/UNC'S PROPOSAL WOULD NOT INCREASE SURPLUS SHIP TIME, IT WOULD APPEAR THAT NSF ACTED PROPERLY IN AWARDING THE CONTRACT TO THE OFFEROR WHICH ALSO BEST SATISFIED THE REQUIREMENT OF NOT INCREASING, AND PREFERABLY REDUCING, OPERATING COSTS.

FN1 MIAMI ULTIMATELY WAS SELECTED TO CONSTRUCT THE SECOND SHIP ALSO, SO THAT NEGOTIATIONS WITH THESE OFFERORS CONCERNED ONLY THE CONTRACT FOR OPERATION OF THE SECOND SHIP. FN2 WHILE THE FEDERAL PROCUREMENT REGULATIONS DO NOT ADDRESS AMENDMENT OF A SOLICITATION BEFORE NEGOTIATIONS, THEY DO RECOGNIZE THAT MODIFICATIONS ARE MADE DURING NEGOTIATIONS AND REQUIRE THAT A WRITTEN AMENDMENT BE SENT TO ALL PROSPECTIVE CONTRACTORS. 41 C.F.R. SEC. 1-3.805-1(D). SEE ALSO 41 C.F.R. SEC. 1-2.207 (ADVERTISED PROCUREMENTS).

FN3 NSF GAVE NOTICE OF THE NEW CONDITIONS TO THE THREE OFFERORS WITHIN THE COMPETITIVE RANGE FOR THE CONTRACT TO OPERATE THE SECOND VESSEL. WHEN THE COMPETITIVE RANGE HAS BEEN ESTABLISHED IN A NEGOTIATED PROCUREMENT, NOTIFICATION OF A CHANGE OR MODIFICATION MAY BE LIMITED TO THOSE OFFERORS WITHIN THE COMPETITIVE RANGE. DEVELOPMENT ASSOCIATES, INC., B-188416, AUGUST 1, 1977. IF A CHANGE OR MODIFICATION IS SO SUBSTANTIAL AS TO WARRANT A COMPLETE REVISION OF THE SOLICITATION, THE ORIGINAL SOLICITATION SHOULD BE CANCELED AND A NEW SOLICITATION ISSUED TO ALL OFFERORS. SEE 55 COMP.GEN. 787, 797 (1976); DEFENSE ACQUISITION REGULATION SEC. 3- 805.4(B). HERE, IT APPEARS THAT NSF IN EFFECT DETERMINED THAT THE NEW CONDITIONS DID NOT REQUIRE RESOLICITATION AND WE SEE NO EVIDENCE IN THE RECORD THAT NSF'S ACTION WAS UNREASONABLE.

FN4 IN THIS REGARD, NSF'S ONLY RECOURSE OUTSIDE THE CONTRACT AWARD WOULD BE TO WITHHOLD ITS CONTRIBUTION TO THE OPERATING COSTS OF CERTAIN SHIPS. OTHERWISE, SINCE IT DOES NOT CONTROL USE OF THE FLEET, NSF COULD ONLY SUGGEST, NOT REQUIRE, THE RETIREMENT OF A VESSEL.

FN5 AT THAT POINT, NSF COULD HAVE CANCELED THE SOLICITATION ALTOGETHER. SEE, E.G., NORTEC CORPORATION, B-198232, SEPTEMBER 19, 1980.

FN6 NSF FAILED TO CONSIDER THE SAVINGS RESULTING FROM A TRANSFER OF SHIPS BY WASHINGTON. WHEN WASHINGTON'S PROPOSAL WAS FIRST CONSIDERED BY THE ADVISORY GROUP, SEVERAL CONDITIONS WERE OUTLINED, INCLUDING RETIREMENT OF A LARGE SHIP AND A TRANSFER OF OTHER SHIPS. AFTER THAT RECOMMENDATION WAS MADE, BUT BEFORE NEGOTIATIONS BEGAN FOR THE SECOND CONTRACT, THE TRANSFER OF SHIPS WAS CARRIED OUT BY WASHINGTON, WITH NSF'S APPROVAL. THAT TRANSFER RESULTED IN A SAVING OF $950,000. CONSIDERING WHAT IT WOULD HAVE COST NSF IF THE SHIP WERE OPERATED BY WASHINGTON ($785,000), THE NET SAVINGS FROM WASHINGTON'S PROPOSAL THUS WOULD HAVE BEEN $165,000. COMPARISON, DUKE/UNC PROPOSED A NET SAVINGS OF $350,000.